Connecticut Seal

General Assembly

File No. 303

    February Session, 2016

Substitute House Bill No. 5591

House of Representatives, March 30, 2016

The Committee on Labor and Public Employees reported through REP. TERCYAK of the 26th Dist., Chairperson of the Committee on the part of the House, that the substitute bill ought to pass.

AN ACT CREATING THE CONNECTICUT RETIREMENT SECURITY PROGRAM.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective from passage) As used in this section and sections 2 to 12, inclusive, of this act:

(1) "Authority" means the Connecticut Retirement Security Authority established pursuant to section 2 of this act;

(2) "Board" means the Connecticut Retirement Security Authority board of directors established pursuant to section 2 of this act;

(3) "Contribution level" means (A) the contribution rate selected by the participant that may be expressed as (i) a percentage of the participant's taxable wages as is required to be reported under Sections 6041 and 6051 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, or (ii) a dollar amount up to the maximum deductible amount for the participant's taxable year under Section 219(b)(1) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time; or (B) in the absence of an affirmative election by the participant, three per cent of the participant's taxable wages as is required to be reported under Sections 6041 and 6051 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, or such other amount as determined by the authority;

(4) "Covered employee" means an individual (A) who has been employed by a qualified employer for a period of not less than one hundred twenty days, (B) who is nineteen years of age or older, (C) who performs services within the state for purposes of section 31-222 of the general statutes, and (D) whose service or employment is not excluded under the provisions of subdivision (5) of subsection (a) of section 31-222 of the general statutes;

(5) "Participant" means any individual participating in the program;

(6) "Program" means the Connecticut Retirement Security Program established pursuant to section 3 of this act;

(7) "Qualified employer" means any person, corporation, limited liability company, firm, partnership, voluntary association, joint stock association or other entity doing business in the state during the calendar year, whether for profit or not for profit, that employed on October first of the preceding calendar year five or more individuals in the state and has paid not less than five of such individuals taxable wages of not less than five thousand dollars in the preceding calendar year. "Qualified employer" does not include: (A) The federal government, (B) the state or any political subdivision thereof, (C) any municipality, unit of a municipality or municipal housing authority, (D) an employer employing only individuals whose services are excluded under subdivision (5) of subsection (a) of section 31-222 of the general statutes, or (E) an employer that was not in existence at all times during the current calendar year and the preceding calendar year;

(8) "Individual retirement account" means a Roth IRA or a traditional IRA, as the case may be;

(9) "Roth IRA" means an account described in Section 408A of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time;

(10) "Traditional IRA" means an account described in Section 408 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time; and

(11) "Normal retirement age" means sixty-five years of age or an earlier age as is chosen by the participant, except that in no case can the age be earlier than the age specified in Section 216(l)(1) of the Social Security Act, 42 USC 416(l)(1), as amended from time to time.

Sec. 2. (NEW) (Effective from passage) (a) There is hereby established and created a body politic and corporate, constituting a public instrumentality and political subdivision of the state of Connecticut established and created for the performance of an essential public and governmental function, to be known as the Connecticut Retirement Security Authority. The authority shall not be construed to be a department, institution or agency of the state.

(b) The powers of the authority shall be vested in and exercised by a board of directors, which shall consist of nine voting members, each a resident of state, (1) the State Treasurer who shall serve as an ex officio voting member; (2) the State Comptroller who shall serve as an ex officio voting member; (3) one appointed by the speaker of the House of Representatives who shall serve an initial term of four years; (4) one appointed by the majority leader of the House of Representatives who shall serve an initial term of four years; (5) one appointed by the minority leader of the House of Representatives, who shall serve an initial term of four years; (6) one appointed by the president pro tempore of the Senate, who shall serve an initial term of four years; (7) one appointed by the majority leader of the Senate, who shall serve an initial term of four years; (8) one appointed by the minority leader of the Senate, who shall serve an initial term of four years; and (9) one appointed by the Governor, who shall serve an initial term of four years. Thereafter, said members of the General Assembly and the Governor shall appoint members of the board to succeed such appointees whose terms expire and each member so appointed shall hold office for a term of six years from July first in the year of his or her appointment. Appointed members shall include: (A) An individual with a favorable reputation for skill, knowledge and experience in the interests of employees in retirement savings; (B) an individual with a favorable reputation for skill, knowledge and experience in the interests of employers in retirement savings; and (C) an individual having a favorable reputation for skill, knowledge and experience in offering retirement savings products or advice. Each ex-officio member may designate such member's deputy or any member of such member's staff to represent such member at meetings of the board with full power to act and vote on such member's behalf.

(c) All appointments to the board shall be made not later than July 31, 2016. Any vacancy shall be filled by the appointing authority not later than thirty calendar days after the office becomes vacant. Any member previously appointed to the board may be reappointed.

(d) The Governor, with the advice and consent of both houses of the General Assembly, shall select a chairperson of the board from among the members of the board. The board shall annually elect a vice-chairperson and such other officers as it deems necessary from among its members. The board may appoint an executive director and assistant executive director, who shall not be members of the board and who shall serve at the pleasure of the board. The executive director and assistant executive director shall be employees of the authority and shall receive such compensation as prescribed by the board.

(e) The members of the board shall serve without compensation but shall, within available appropriations, be reimbursed in accordance with the standard travel regulations for all necessary expenses that they may incur through service on the board.

(f) (1) Each member of the board shall, not later than ten calendar days after his or her appointment, take and subscribe the oath of affirmation required by article XI, section 1, of the State Constitution. Each member's term shall begin from the date the member takes such oath. The oath shall be administered by the Secretary of the State and shall be filed in the office of the Secretary of the State.

(2) Each member of the board authorized by resolution of the board to handle funds or sign checks for the program, and any other authorized officer, shall, not later than ten calendar days after the date the board adopts such authorizing resolution, execute a surety bond in the penal sum of fifty thousand dollars or, in lieu thereof, the chairperson shall obtain a blanket position bond covering the executive director and every member of the board and other employee or authorized officer of the authority in the penal sum of fifty thousand dollars. Each such bond shall be (A) conditioned upon the faithful performance of the duties of the chairperson or the members, executive director and other authorized officers or employees, as the case may be, (B) executed by a surety company authorized to transact business in the state as surety, and (C) filed in the office of the Secretary of the State. The cost of each such bond shall be paid by the authority.

(g) An authorized officer or the executive director, if one is appointed by the board pursuant to subsection (d) of this section, shall supervise the administrative affairs and technical activities of the program in accordance with the directives of the board. Such authorized officer or executive director, as the case may be, shall keep a record of the proceedings of the program and shall be custodian of all books, documents and papers filed with the program, the minute book or journal of the program and its official seal. Such authorized officer or executive director, as the case may be, may cause copies to be made of all minutes and other records and documents of the program and may give certificates under the official seal of the program to the effect that such copies are true copies, and all persons dealing with the program may rely upon such certificates.

(h) Four members of the board shall constitute a quorum for the transaction of any business or the exercise of any power of the authority. Each member shall be entitled to one vote on the board.

(i) (1) No member of the board or any officer, agent or employee of the authority shall, directly or indirectly, have any financial interest in any corporation, business trust, estate, trust, partnership or association, two or more persons having a joint or common interest, or any other legal or commercial entity contracting with the authority. Any individual who violates the provisions of this subsection shall be fined not less than fifty dollars nor more than one thousand dollars or imprisoned not more than thirty days, or both.

(2) Notwithstanding the provisions of subdivision (1) of this subsection or any other section of the general statutes, it shall not be a conflict of interest or a violation of the provisions of said subdivision or any other section of the general statutes for a trustee, director, officer or employee of a bank, investment advisor, investment company or investment banking firm, or a person having the required favorable reputation for skill, knowledge and experience in retirement savings, to serve as a member of the board, provided, in each case to which the provisions of this subdivision are applicable, such trustee, director, officer or employee of such a firm abstains from discussion, deliberation, action and vote by the board in specific respect to any undertaking pursuant to this section or sections 3 to 11, inclusive, of this act in which such firm has a direct interest separate from the interests of all similar firms generally.

(j) The board, on behalf of the authority, and for the purpose of implementing the Connecticut Retirement Security Program established pursuant to section 3 of this act, shall adopt written procedures in accordance with the provisions of section 1-121 of the general statutes for the purposes of:

(1) Adopting an annual budget and plan of operations, including a requirement of board approval before such budget or plan may take effect;

(2) Hiring, dismissing, promoting and compensating employees of the authority, instituting an affirmative action policy and requiring board approval before a position may be created or a vacancy filled;

(3) Acquiring real and personal property and personal services, including requiring board approval for any nonbudgeted expenditure in excess of five thousand dollars;

(4) Contracting for financial, legal and other professional services, and requiring that the authority solicit proposals not less than every three years for each such service used by the board or authority, except for any firm that contracts to provide custodial, recordkeeping or other services for the provision of an individual retirement account such solicitation shall be not less than every ten years; and

(5) Using surplus funds to the extent authorized under this act or other provisions of the general statutes.

(k) The authority shall continue as long as the program remains in effect and until its existence is terminated by law. Upon termination of the existence of the authority, all its rights and properties shall pass to and be vested in the state of Connecticut.

(l) The provisions of this section and section 1-125 of the general statutes, as amended by this act, shall apply to any member, director or employee of the authority. No person shall be subject to civil liability for the debts, obligations or liabilities of the authority as provided in this section and section 1-125 of the general statutes, as amended by this act.

Sec. 3. (NEW) (Effective from passage) (a) There is established the Connecticut Retirement Security Program the purpose of which shall be to promote and enhance retirement savings for private sector employees in the state. The board of directors of the Connecticut Retirement Security Authority may:

(1) Adopt bylaws for the regulation of the affairs of the board and the conduct of its business;

(2) Adopt an official seal and alter the same at the pleasure of the board;

(3) Maintain an office at such place or places in the state as the board may designate;

(4) Sue and be sued in its own name;

(5) Establish criteria and guidelines for the retirement programs to be offered pursuant to this section and sections 4 to 11 of this act;

(6) Receive and invest moneys in the program in any instruments, obligations, securities or property in accordance with section 8 of this act;

(7) Contract with financial institutions or other organizations offering or servicing retirement programs. The authority may require that each participant be charged a fee to defray the costs of the program. The amount and method of collection of such fee shall be determined by the authority;

(8) Employ attorneys, accountants, consultants, financial experts, loan processors, banks, managers and such other employees and agents as may be necessary in the board's judgment, and to fix the compensation of such individuals;

(9) Charge and equitably apportion among participants the administrative costs and expenses incurred in the exercise of the board's powers and duties as granted by this section;

(10) Borrow working capital funds and other funds as may be necessary for the start-up and continuing operation of the program, provided such funds are borrowed in the name of the authority only. Such borrowings shall be payable solely from revenues of the authority;

(11) Make and enter into contracts or agreements with professional service providers, including, but not limited to, financial consultants and lawyers, as may be necessary or incidental to the performance of the board's duties and the execution of its powers under this section;

(12) Establish policies and procedures for the protection of program participants' personal and confidential information; and

(13) Do all things necessary or convenient to carry out the provisions of sections 2 to 11, inclusive, of this act.

(b) The board of directors of the Connecticut Retirement Security Authority shall enter into memoranda of understanding with the Labor Department and other state agencies regarding (1) the gathering or dissemination of information necessary for the operations of the program, subject to such obligations of confidentiality as may be agreed or required by law, (2) the sharing of costs incurred pursuant to the gathering and dissemination of such information, and (3) the reimbursement of costs for any enforcement activities conducted pursuant to section 10 of this act. Each state agency may also enter into such memoranda of understanding.

Sec. 4. (NEW) (Effective from passage) (a) The Connecticut Retirement Security Authority board of directors shall prepare informational materials regarding the Connecticut Retirement Security Program for distribution by qualified employers to plan participants and prospective plan participants pursuant to section 7 of this act. Such informational materials shall include, but need not be limited to:

(1) The benefits and risks associated with making contributions to or making withdrawals from the program;

(2) The process for making contributions to the program, including a contribution election form;

(3) Clear and conspicuous notice regarding the default contribution level;

(4) The process by which a participant may opt out of the program by electing a contribution level of zero;

(5) The process for withdrawing retirement savings from the program, including an explanation of how the tax treatment of withdrawals may differ between a Roth IRA and a traditional IRA available under the program;

(6) The process by which a participant may obtain additional information on the program, including information regarding investment options available under the program; and

(7) Such other information as the board may deem necessary or advisable to provide to participants, potential participants and qualified employers in the state.

(b) Not less than quarterly, the board shall provide a statement to each participant that shall include, but need not be limited to, the following information:

(1) The account balance in a participant's individual retirement account, including the value of the participant's investment in each investment option selected by the participant;

(2) The various investment options available to each participant and the process by which a participant may select investment options for his or her contributions in accordance with subsection (b) of section 31-71j of the general statutes, as amended by this act, or as prescribed by the authority;

(3) The amount of fees charged to each participant's individual retirement account and a description of the services to which such charges relate; and

(4) At the election of the board, an estimate of the amount of income the account is projected to generate for a participant's retirement based on reasonable assumptions.

(c) Not less than annually, the board shall provide each participant with notification regarding fees that may be imposed through the program and information regarding the various investment options that may be available to participants. The board may provide such notification and information in the form of a prospectus or similar document.

(d) The board, on behalf of the authority, may adopt policies and procedures in accordance with the provisions of section 1-121 of the general statutes for the electronic dissemination of any notices or information required to be provided to participants, potential participants and qualified employers pursuant to the provisions of this section.

Sec. 5. (NEW) (Effective from passage) (a) The Connecticut Retirement Security Program shall provide for the establishment and maintenance of an individual retirement account for each program participant. Such individual retirement account shall be established and maintained through the program or a third-party entity in the business of establishing and maintaining individual retirement accounts. Program assets shall be held in trust or custodial accounts meeting the requirements of Section 408(a) or (c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, or any other applicable federal law requirements. Each participant shall have the right to elect whether to contribute to a traditional IRA or a Roth IRA. In the absence of a participant's affirmative election, a Roth IRA shall be established for the participant.

(b) Interest, investment earnings and investment losses shall be allocated to each participant's individual retirement account. A participant's benefit under the program shall be equal to the balance in such participant's individual retirement account as of any applicable measurement date prescribed by the program.

(c) The Connecticut Retirement Security Authority shall establish, or cause to be established, processes to prevent a participant's contributions to the program from exceeding the maximum amount of deduction under 26 USC 219(b)(1) for the participant's tax year.

(d) The state shall not be liable for the payment of any benefit to any participant or beneficiary of any participant and shall not be liable for any liability or obligation of the authority. The authority shall not be liable for the payment of any benefit to any participant or beneficiary of any participant, except with respect to any individual retirement accounts established and maintained by the authority.

Sec. 6. (NEW) (Effective from passage) (a) The Connecticut Retirement Security Authority board of directors, in conducting the business of the authority, including its oversight functions, shall act: (1) With the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims; (2) solely in the interests of the program's participants and beneficiaries; (3) for the exclusive purposes of providing benefits to participants and beneficiaries and defraying reasonable expenses of administering the program; and (4) in accordance with the provisions of sections 2 to 11, inclusive, of this act and any other applicable sections of the general statutes.

(b) The board shall, to the extent reasonable and practicable, require any agents engaged or appointed by the authority to abide by the standard of care described in subsection (a) of this section.

Sec. 7. (NEW) (Effective from passage) (a) (1) Not later than July 1, 2017, and annually thereafter, each qualified employer shall provide each of its covered employees with the informational materials prepared by the Connecticut Retirement Security Authority board of directors pursuant to section 4 of this act. For any employee of a qualified employer who (A) is hired on or after July 1, 2017, or (B) does not meet the definition of covered employee pursuant to section 1 of this act, such qualified employer shall provide such informational materials to such employee not later than thirty days, or such other time period as prescribed by the authority, after (i) the date of such employee's hiring, or (ii) the date such employee meets the definition of covered employee pursuant to section 1 of this act.

(2) Not later than sixty days after a qualified employer provides informational materials to a covered employee in accordance with subsection (a) of this section, or such other time period as prescribed by the authority, and subject to the provisions of subdivision (3) of this subsection, such qualified employer shall automatically enroll each of its covered employees in the program at the participant's contribution level in accordance with the provisions of section 31-71j of the general statutes, as amended by this act.

(3) A covered employee may opt out of the program by electing a contribution level of zero.

(4) (A) A qualified employer that (i) maintains a retirement plan or retirement arrangement described under Section 219(g)(5) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, or (ii) any other retirement arrangement approved by the authority, shall be exempt from the requirements of subdivisions (1) and (2) of this subsection.

(B) A qualified employer shall not be considered to maintain a retirement plan or retirement arrangement described under said Section 219(g)(5) or any other retirement arrangement approved by the authority pursuant to subparagraph (A) of this subdivision, if the authority determines that (i) as of the first day of the previous calendar year, no new participant was eligible to be enrolled in a retirement plan or retirement arrangement maintained by such qualified employer, and (ii) on and after the first day of the previous calendar year, no contributions were made to such retirement plan or retirement arrangement by or on behalf of a participant in such plan or arrangement.

(5) The authority may defer the effective date of the program, in whole or in part, and for particular categories of employers, as the authority deems necessary to effectuate the purposes of sections 2 to 11, inclusive, of this act in a manner that minimizes the disruption and burdens that may exist for any qualified employer.

(b) An employer that does not otherwise meet the definition of a qualified employer may make the program available to its employees subject to such rules and procedures as may be prescribed by the authority and in accordance with the provisions of subsection (a) of this section, except no such employer shall require any employee to enroll in the program.

(c) Any individual who is not enrolled in the program pursuant to subsection (a) of this section may participate in the program at any time subject to such rules and procedures as the authority may prescribe. The authority shall provide the informational materials described in subdivision (1) of subsection (a) of this section to any such individual at or before the time of such individual's enrollment in the program.

(d) To the extent permitted under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, the authority shall allow any individual to establish or contribute to an individual retirement account maintained for such individual under the program by rolling over funds from an existing retirement savings account of the individual.

(e) A qualified employer that withholds a contribution from a covered employee's compensation in connection with the program shall transmit such contribution on the earliest date the amount withheld from the covered employee's compensation can reasonably be segregated from the qualified employer's assets, but not later than the fifteenth business day of the month following the month in which the covered employee's contribution amounts are withheld from his or her paycheck.

(f) No qualified employer shall be permitted to make a contribution to the program.

Sec. 8. (NEW) (Effective from passage) The Connecticut Retirement Security Authority shall provide for each participant's account to be invested in (1) an age-appropriate target date fund, except as provided in subsection (b) of section 9 of this act, or (2) such other investment vehicles as the authority may prescribe.

Sec. 9. (NEW) (Effective from passage) (a) The Connecticut Retirement Security Authority shall establish rules and procedures governing the distribution of funds from the program. Such rules and procedures shall allow for such distributions as may be permitted or required by the program and any applicable provisions of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time.

(b) The program shall include the following design features prescribed by the authority, provided the authority determines such features to be feasible and cost effective:

(1) Designate a lifetime income investment for the program intended to provide participants with a source of retirement income for life;

(2) Provide to each participant, one year in advance of the participant's normal retirement age, a disclosure explaining (A) the rights and features of the lifetime income investment; (B) that once the participant reaches normal retirement age, fifty per cent of the participant's account will be invested in the lifetime income investment; and (C) that the participant may elect to invest a higher percentage of his or her account balance in the lifetime income option;

(3) On the date a participant reaches his or her normal retirement age, invest fifty per cent of the participant's account balance, or such higher amount as specified by the participant, in the lifetime income investment;

(4) Permit each participant to elect a date not earlier than his or her normal retirement age on which to begin receiving distributions, provided, in the absence of an election, such distributions shall commence not later than ninety days after the participant reaches his or her normal retirement age; and

(5) Establish procedures whereby each participant may elect to invest a higher percentage of his or her account balance in the lifetime income investment.

Sec. 10. (NEW) (Effective from passage) (a) The Attorney General may investigate any violation of section 6 of this act. If the Attorney General finds that any member of the Connecticut Retirement Security Authority board of directors, or any agent engaged or appointed by the board or the authority has violated or is violating any provision of said section, the Attorney General may bring a civil action in the superior court for the judicial district of Hartford under this section in the name of the state against such member or agent. The remedies available to a court in any such action shall be limited to injunctive relief. Nothing in this section shall be construed to create a private right of action.

(b) If a qualified employer fails to remit contributions to the program in the time period specified in subsection (e) of section 7 of this act, such failure to remit such contributions shall be a violation of section 31-71e of the general statutes, as amended by this act.

(c) If a qualified employer fails to enroll a covered employee as required under subsection (a) of section 7 of this act, such covered employee, or the Labor Commissioner, may bring a civil action to require the qualified employer to enroll the covered employee and shall recover such costs and reasonable attorney's fees as may be allowed by the court.

Sec. 11. (NEW) (Effective from passage) (a) The Connecticut Retirement Security Authority shall keep an accurate account of all its activities, receipts and expenditures and shall submit, in accordance with the provisions of section 11-4a of the general statutes, a report detailing such activities, receipts and expenditures to the Connecticut Retirement Security Authority board of directors, the Governor, the Office of Auditors of Public Accounts and the joint standing committees of the General Assembly having cognizance of matters relating to labor and finance, revenue and bonding on or before December thirty-first annually. Such report shall be in a form prescribed by the board and shall include projected activities of the authority for the next fiscal year and shall be subject to approval by the Auditors of Public Accounts.

(b) The Auditors of Public Accounts may conduct a full audit of the books and accounts of the authority pertaining to such activities, receipts and expenditures, personnel, services or facilities, in accordance with the provisions of section 2-90 of the general statutes. For the purposes of such audit, the Auditors of Public Accounts shall have access to the properties and records of the authority, and may prescribe methods of accounting and the rendering of periodical reports in relation to projects undertaken by the authority.

(c) The authority shall enter into memoranda of understanding with the State Comptroller pursuant to which the authority shall provide, in such form and manner as prescribed by the State Comptroller, information that may include, but need not be limited to, the current revenues and expenses of the authority, the sources or recipients of such revenues or expenses, the date such revenues or expenses were received or dispersed and the amount and the category of such revenues or expenses. The State Comptroller may also enter into such memoranda of understanding.

Sec. 12. (Effective from passage) The Connecticut Retirement Security Authority may study the feasibility of the state or the authority making available to employers a multiple-employer 401(k) plan or other tax-favored retirement savings vehicle.

Sec. 13. Subdivision (12) of section 1-79 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(12) "Quasi-public agency" means Connecticut Innovations, Incorporated, the Connecticut Health and Education Facilities Authority, the Connecticut Higher Education Supplemental Loan Authority, the Connecticut Student Loan Foundation, the Connecticut Housing Finance Authority, the State Housing Authority, the Materials Innovation and Recycling Authority, the Capital Region Development Authority, the Connecticut Lottery Corporation, the Connecticut Airport Authority, the Connecticut Health Insurance Exchange, the Connecticut Green Bank, the Connecticut Retirement Security Authority, the Connecticut Port Authority and the State Education Resource Center.

Sec. 14. Subdivision (1) of section 1-120 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(1) "Quasi-public agency" means Connecticut Innovations, Incorporated, the Connecticut Health and Educational Facilities Authority, the Connecticut Higher Education Supplemental Loan Authority, the Connecticut Student Loan Foundation, the Connecticut Housing Finance Authority, the Connecticut Housing Authority, the Materials Innovation and Recycling Authority, the Capital Region Development Authority, the Connecticut Lottery Corporation, the Connecticut Airport Authority, the Connecticut Health Insurance Exchange, the Connecticut Green Bank, the Connecticut Retirement Security Authority, the Connecticut Port Authority and the State Education Resource Center.

Sec. 15. Section 1-124 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(a) Connecticut Innovations, Incorporated, the Connecticut Health and Educational Facilities Authority, the Connecticut Higher Education Supplemental Loan Authority, the Connecticut Student Loan Foundation, the Connecticut Housing Finance Authority, the Connecticut Housing Authority, the Materials Innovation and Recycling Authority, the Connecticut Airport Authority, the Capital Region Development Authority, the Connecticut Health Insurance Exchange, the Connecticut Green Bank, the Connecticut Retirement Security Authority, the Connecticut Port Authority and the State Education Resource Center shall not borrow any money or issue any bonds or notes which are guaranteed by the state of Connecticut or for which there is a capital reserve fund of any kind which is in any way contributed to or guaranteed by the state of Connecticut until and unless such borrowing or issuance is approved by the State Treasurer or the Deputy State Treasurer appointed pursuant to section 3-12. The approval of the State Treasurer or said deputy shall be based on documentation provided by the authority that it has sufficient revenues to (1) pay the principal of and interest on the bonds and notes issued, (2) establish, increase and maintain any reserves deemed by the authority to be advisable to secure the payment of the principal of and interest on such bonds and notes, (3) pay the cost of maintaining, servicing and properly insuring the purpose for which the proceeds of the bonds and notes have been issued, if applicable, and (4) pay such other costs as may be required.

(b) To the extent Connecticut Innovations, Incorporated, the Connecticut Higher Education Supplemental Loan Authority, the Connecticut Student Loan Foundation, the Connecticut Housing Finance Authority, the Connecticut Housing Authority, the Materials Innovation and Recycling Authority, the Connecticut Health and Educational Facilities Authority, the Connecticut Airport Authority, the Capital Region Development Authority, the Connecticut Health Insurance Exchange, the Connecticut Green Bank, the Connecticut Retirement Security Authority, the Connecticut Port Authority or the State Education Resource Center is permitted by statute and determines to exercise any power to moderate interest rate fluctuations or enter into any investment or program of investment or contract respecting interest rates, currency, cash flow or other similar agreement, including, but not limited to, interest rate or currency swap agreements, the effect of which is to subject a capital reserve fund which is in any way contributed to or guaranteed by the state of Connecticut, to potential liability, such determination shall not be effective until and unless the State Treasurer or his or her deputy appointed pursuant to section 3-12 has approved such agreement or agreements. The approval of the State Treasurer or his or her deputy shall be based on documentation provided by the authority that it has sufficient revenues to meet the financial obligations associated with the agreement or agreements.

Sec. 16. Section 1-125 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

The directors, officers and employees of Connecticut Innovations, Incorporated, the Connecticut Higher Education Supplemental Loan Authority, the Connecticut Student Loan Foundation, the Connecticut Housing Finance Authority, the Connecticut Housing Authority, the Materials Innovation and Recycling Authority, including ad hoc members of the Materials Innovation and Recycling Authority, the Connecticut Health and Educational Facilities Authority, the Capital Region Development Authority, the Connecticut Airport Authority, the Connecticut Lottery Corporation, the Connecticut Health Insurance Exchange, the Connecticut Green Bank, the Connecticut Retirement Security Authority, the Connecticut Port Authority and the State Education Resource Center and any person executing the bonds or notes of the agency shall not be liable personally on such bonds or notes or be subject to any personal liability or accountability by reason of the issuance thereof, nor shall any director or employee of the agency, including ad hoc members of the Materials Innovation and Recycling Authority, be personally liable for damage or injury, not wanton, reckless, wilful or malicious, caused in the performance of his or her duties and within the scope of his or her employment or appointment as such director, officer or employee, including ad hoc members of the Materials Innovation and Recycling Authority. The agency shall protect, save harmless and indemnify its directors, officers or employees, including ad hoc members of the Materials Innovation and Recycling Authority, from financial loss and expense, including legal fees and costs, if any, arising out of any claim, demand, suit or judgment by reason of alleged negligence or alleged deprivation of any person's civil rights or any other act or omission resulting in damage or injury, if the director, officer or employee, including ad hoc members of the Materials Innovation and Recycling Authority, is found to have been acting in the discharge of his or her duties or within the scope of his or her employment and such act or omission is found not to have been wanton, reckless, wilful or malicious.

Sec. 17. Section 31-71e of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

No employer may withhold or divert any portion of an employee's wages unless (1) the employer is required or empowered to do so by state or federal law, or (2) the employer has written authorization from the employee for deductions on a form approved by the commissioner, or (3) the deductions are authorized by the employee, in writing, for medical, surgical or hospital care or service, without financial benefit to the employer and recorded in the employer's wage record book, or (4) the deductions are for contributions attributable to automatic enrollment, as defined in section 31-71j, as amended by this act, in a retirement plan described in Section 401(k), 403(b), 408, 408A or 457 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, established by the employer, or in the Connecticut Retirement Security Program established pursuant to section 3 of this act, or (5) the employer is required under the law of another state to withhold income tax of such other state with respect to (A) employees performing services of the employer in such other state, or (B) employees residing in such other state.

Sec. 18. Section 31-71j of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(a) As used in this section: (1) "Automatic enrollment" means a plan provision in an employee retirement plan described in Section 401(k) or 403(b) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, or a governmental deferred compensation plan described in Section 457 of said Internal Revenue Code, or a payroll deduction Individual Retirement Account plan described in Section 408 or 408A of said Internal Revenue Code, or the Connecticut Retirement Security Program established pursuant to section 3 of this act, under which an employee is treated as having elected to have the employer make a specified contribution to the plan equal to a percentage of compensation specified in the plan until such employee affirmatively elects to not have such contribution made or elects to make a contribution in another amount; and (2) "automatic contribution arrangement" means an arrangement under an automatic enrollment plan under which, in the absence of an investment election by the participating employee, contributions made under such plan are invested in accordance with regulations prescribed by the United States Secretary of Labor under Section 404(c)(5) of the Employee Retirement Income Security Act of 1974, as amended from time to time.

(b) Any employer who provides automatic enrollment shall be relieved of liability for the investment decisions made by the employer or the Connecticut Retirement Security Authority pursuant to section 8 of this act on behalf of any participating employee under an automatic contribution arrangement, provided:

(1) The plan allows the participating employee at least quarterly opportunities to select investments for the employee's contributions between investment alternatives available under the plan;

(2) The employee is given notice of the investment decisions that will be made in the absence of the employee's direction, a description of all the investment alternatives available under the plan and a brief description of procedures available for the employee to change investments; and

(3) The employee is given at least annual notice of the actual investments made on behalf of the employee under such automatic contribution arrangement.

(c) Nothing in this section shall modify any existing responsibility of employers or other plan officials for the selection of investment funds for participating employees.

(d) The relief from liability of the employer under this section shall extend to any other plan official who actually makes the investment decisions on behalf of participating employees under an automatic contribution arrangement.

Sec. 19. Sections 31-410 to 31-415, inclusive, of the general statutes are repealed. (Effective July 1, 2016)

This act shall take effect as follows and shall amend the following sections:

Section 1

from passage

New section

Sec. 2

from passage

New section

Sec. 3

from passage

New section

Sec. 4

from passage

New section

Sec. 5

from passage

New section

Sec. 6

from passage

New section

Sec. 7

from passage

New section

Sec. 8

from passage

New section

Sec. 9

from passage

New section

Sec. 10

from passage

New section

Sec. 11

from passage

New section

Sec. 12

from passage

New section

Sec. 13

July 1, 2016

1-79(12)

Sec. 14

July 1, 2016

1-120(1)

Sec. 15

July 1, 2016

1-124

Sec. 16

July 1, 2016

1-125

Sec. 17

July 1, 2016

31-71e

Sec. 18

July 1, 2016

31-71j

Sec. 19

July 1, 2016

Repealer section

LAB

Joint Favorable Subst.

 

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 17 $

FY 18 $

Department of Revenue Services

GF - Potential Revenue Loss

Zero to 10 million

Zero to 10 million

Note: GF=General Fund

Municipal Impact: None

Explanation

Explanation

The bill establishes the Connecticut Retirement Security Authority (CRSA), a quasi-public state agency governed by a board of directors, which may be supported from administrative fees charged to participating members. The authority is tasked with establishing and implementing the Connecticut Retirement Security Program (CRSP).

The bill specifies that the retirement accounts established under the CRSP be either Roth (default) or traditional IRA, both of which offer tax-advantaged status under federal and state income tax law. Based on the assumptions regarding opt-out rates and covered population included in the market feasibility study of the CRSP, this results in a potential annualized General Fund revenue loss of zero to $10 million beginning as early as FY 17 (timing is dependent upon when the program is actually implemented). To the extent all plan participants utilize the default Roth IRA option; there is no revenue impact through FY 21.1 To the extent all plan participants utilize the traditional IRA option; there is an estimated annualized revenue loss of up to $10 million due to the immediate deductibility of CRSP contributions against the Personal Income Tax.

The bill is not anticipated to result in a cost to the state in general from the CRSA/CRSP as (1) the authority is not considered a state agency and therefore its employees are not considered state employees, (2) the state is not liable for benefits payable to account holders, (3) the state and municipalities are not considered qualified employers and therefore not subject to the participation requirements of the bill, and (4) any funds borrowed by the authority are to be borrowed in the name of the authority and payable from revenues of the authority. The source of working capital funds and other necessary start-up costs are not specified in the bill. The estimated start-up cost for the CRSA/CRSP is estimated to be at least $500,000 to $1 million, and a commiserate amount annually thereafter to run the CRSA.2 At a 3% contribution rate, it is anticipated the CRSA/CRSP may be financially self-sustaining three to four years after the program starts. Therefore, any start-up capital may be repaid within five to eight years after the program is implemented.3 There may be cost to the state to the extent that the state provides the start-up funds for the program. However, the bill does not require the state to participate financially in the program.

The provisions of the bill relating to the State Treasurer, Attorney General, State Comptroller and Auditors of Public Accounts do not result in a fiscal impact to those state agencies as the bill's provisions are within the agencies' scope of duties. There is not anticipated to be a cost to the Department of Labor (DOL) as the bill does not establish reporting requirements or another relationship between the department and participating employers.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

Sources:

State of Connecticut Retirement Security Board Market Feasibility Study

OLR Bill Analysis

sHB 5591

AN ACT CREATING THE CONNECTICUT RETIREMENT SECURITY PROGRAM.

SUMMARY:

This bill creates the Connecticut Retirement Security Authority (“authority”) to establish a program for individual retirement accounts (IRAs) for eligible private-sector employees, who are automatically enrolled in the plan unless they opt out. The authority is administered by a nine-member Connecticut Retirement Security Authority Board, which the bill establishes as a quasi-public authority under state law.

The bill's requirements apply to all “qualified employers,” i.e., private sector employers that employ at least five people each of whom was paid at least $5,000 in wages in the preceding calendar year. “Covered employees” are those who have worked for a qualified employer for a minimum of 120 days and are at least 19 years old.

Qualified employers must automatically enroll each covered employee in the program no later than 60 days after the employer provides the employee with informational material on the program the bill requires. If the employee does not affirmatively opt in (contribution options are provided) the employer must enroll the employee with a contribution of 3% of the employee's taxable wages (up to normal IRS limits). A covered employee may opt out of the program by electing a contribution level of zero.

The bill authorizes the authority to charge administrative fees to help defray the cost of the program.

It also contains penalties for employers that fail to remit contributions or that fail to enroll employees.

Under the bill, the individual IRAs will be established and maintained through the authority's program or a third-party entity in the business of establishing and maintaining IRAs. Program assets will be held in trust or custodial accounts meeting IRS requirements.

The bill requires the authority to offer IRAs with a number of specified features, including options for age-appropriate target date funds and procedures for distributions from individual accounts in accordance with applicable IRS rules. In the absence of a participant's affirmative election, the authority will automatically select a traditional IRA. Interest, investment earnings, and investment losses will be allocated to each participant's IRA. A participant's benefit under the program will be equal to the balance in such participant's IRA as of any applicable measurement date set for the program.

The bill provides that the powers of the authority will be vested in a board of directors. The governor selects the board chair with the advice and consent of the General Assembly. The board or its executive director, if one is appointed, will supervise the program's administrative affairs and activities. The bill requires the board to adopt written procedures regarding, among other issues, annual budgets and hiring employees.

It requires the authority's board members to act with care and solely in the interests of the program participants. It also authorizes the attorney general to investigate violations of this requirement and to seek injunctive relief regarding violations.

EFFECTIVE DATE: Upon passage for the provisions creating the authority and its board, requiring the authority to establish procedures and the IRA program, and July 1, 2016 for the provisions conforming the authority with existing quasi-public law and payroll deduction law.

1 — DEFINITIONS

Under the bill:

2 — AUTHORITY AND BOARD OF DIRECTORS

The bill creates the authority and deems it a public instrumentality and political subdivision of the state. The bill specifies the authority is not a state department, institution, or agency.

The powers of the authority are vested in a board of directors, which consists of nine voting members, each a state resident:

The bill requires appointed members to include:

Each ex-officio member may designate his or her deputy or a staff member to represent the member at board meetings with the power to vote on the member's behalf.

All appointments must be made by July 31, 2016 and any vacancy must be filled by the appointing authority no later than 30 calendar days after the office becomes vacant. Board members serve without pay but are reimbursed, within available appropriations, according to standard travel regulations for all necessary expenses.

After the initial term all subsequent appointments are for six-year terms. Any member may be reappointed.

Board Officers and Employees

The governor, with the advice and consent of both houses of the General Assembly, selects a chairperson from among the board members. The board annually elects a vice-chairperson and any other officers it deems necessary from among its members.

The board may appoint an executive director and assistant executive director, who serve at the pleasure of the board. The executive director and assistant executive director are authority employees and are paid as the board determines.

The bill prescribes other administrative aspects of the authority's operations including designating an authorized officer or the executive director, if one is appointed, to supervise the administrative affairs and keep program records.

Oath, Expenses, and Surety Bond

The bill requires each board member to take the state oath of affirmation to uphold the state and U.S. constitutions, not later than ten calendar days after his or her appointment. The secretary of the state administers the oath which must then be filed in the secretary of the state's office.

Each board member authorized by a board resolution to handle funds or sign checks for the program, and any other authorized officer, must, no later than 10 calendar days after authorization, execute a $50,000 surety bond or, in lieu of that, the chairperson must obtain a blanket $50,000 surety bond covering the executive director, board members, and other employees or authorized officers. The authority must pay the cost of each such bond.

Quorum

Under the bill, four board members constitute a quorum for the transaction of any business.

Conflict of Interest

The bill bans board members, officers, or employees from having any financial interest in any corporation, partnership, or other legal or commercial entity that contracts with the authority. Any individual who violates the ban will be fined not less than $50 a day up to $1,000, imprisoned not more than 30 days, or both.

But the bill explicitly states it will not be a conflict of interest under the bill or any other statute for a trustee, director, officer or employee of a bank, investment advisor, investment company or investment banking firm, or a person having the required favorable reputation for skill, knowledge, and experience in retirement savings, to be a board member, provided the trustee, director, or employee abstains from discussion, deliberation, action, and vote by the board in respect to a matter related to the authority and its actions in which the firm has a direct interest.

Board Procedures

The board, for the purpose of implementing the retirement security program established under the bill (see 3), must adopt written procedures for the following:

Upon the authority's termination all its rights and properties pass to and become vested in the state of Connecticut.

Protection from Individual Liability

The bill provides protection from individual liability for any authority board member, director, or employee. This includes protection from civil liability for the debts, obligations, or liabilities of the authority.

3 — RETIREMENT SECURITY PROGRAM

The bill establishes the Connecticut Retirement Security Program (“program”) to promote and enhance retirement savings for private sector employees in the state. It authorizes the authority board to:

Administrative Fees

The bill authorizes the authority to require that a fee be charged and equitably apportioned to each participant to defray the costs of the program. The authority determines the amount and method of collection of the fee, although the bill does not set any fee limits. The bill does not indicate whether the fees are (1) in addition to the employee's contribution or (2) taken out of the contribution. Presumably the fee is taken out of the contribution, as is usually the case with IRAs.

MOUs Regarding Employee Information and Administrative Cost Sharing

The bill requires the board to enter into memoranda of understanding with the Labor Department and other state agencies regarding:

5 — IRA PROGRAM

The bill requires the program to establish and maintain an IRA for each program participant either by the program itself or by a third-party entity in the business of establishing and maintaining IRAs. The assets must be held in trust or custodial accounts meeting the federal requirements for IRAs (Internal Revenue Code of 1986, 408 (a) or (c), as amended from time to time). Each participant has the right to choose either a traditional IRA (pre-tax contributions) or a Roth IRA (after-tax contributions). In the absence of a participant's affirmative election, a Roth IRA will be established for the participant.

The bill specifies that interest, investment earnings, and investment losses are allocated to each participant's IRA. A participant's benefit under the program is equal to the balance in such participant's IRA as of any applicable measurement date.

The bill requires the authority to establish processes to prevent a participant's contributions to the IRA program from exceeding the annual maximum deduction amount set in federal tax law (26 USC 219(b)(1)).

State Exempt from Liability

The bill explicitly exempts the state from any liability (1) related to payments to a participant or beneficiary or (2) of the authority. The authority is only liable for benefits with respect to IRAs the authority maintains.

4 — PROGRAM INFORMATIONAL MATERIAL

The bill requires the authority board of directors to prepare program informational materials for distribution by qualified employers to plan participants and prospective plan participants. At a minimum the informational materials must include:

At least quarterly, the board must provide a statement to each participant that includes, at a minimum:

Annual Fees Notice

At least annually, the board must provide each participant with information on program fees and on the various investment options that may be available. This may be provided in the form of a prospectus or similar document.

Electronic Dissemination of Notices

The board may adopt policies and procedures, provided public notice of the new procedures is met, for the electronic dissemination of any required notices or information to participants, potential participants, and qualified employers.

6 — BOARD DUTY TO ACT WITH PRUDENCE AND IN INTEREST OF PARTICIPANTS

The bill requires the authority to act:

To the extent reasonable, the board must require any agents the authority engages or appoints to abide by the same standards.

7 — EMPLOYER RESPONSIBILITIES AND AUTOMATIC ENROLLMENT

Not later than July 1, 2017, and each subsequent year, each qualified employer must provide each of its covered employees with the informational materials the authority is required to prepare.

For any employee of a qualified employer who (1) is hired on or after July 1, 2017 or (2) does not meet the definition of covered employee under the bill, the employer must provide the informational materials to such employee no later than 30 days, or another time period the authority prescribes, after, (a) the date of such employee's hiring or (b) the date the employee meets the definition of a covered employee.

No later than 60 days after providing the informational materials, the qualified employer must automatically enroll each of its covered employees in the program at a contribution rate (1) the employee selects or, (2) at 3% if the employee did not actively select a contribution rate. The contributions will be made under the provisions of the automatic enrollment law that allows an employer to make enrollment contributions to retirement accounts on an employee's behalf without the employee's affirmative decision to make the contribution.

The bill prohibits employers from making contributions to the program. (Employer contributions would make the program fall under the regulatory authority of the federal Employee Retirement Income Security Act of 1974. In general, retirement programs that include private sector employer contributions are regulated under ERISA.)

Employee Opt-Out

Existing law and the bill allow employees to affirmatively opt out of the automatic contribution plan. Under the bill a covered employee may opt out of the program by electing a contribution level of zero.

Delaying Program Start Date

The bill permits the authority to delay the effective date of the program, in whole or in part, and for particular categories of employers, as it deems necessary to implement the bill's provisions and minimize the disruption and burdens that may exist for any qualified employer.

Exempt Employers

A qualified employer that maintains a retirement plan recognized under the federal tax code or approved by the authority is exempt from the bill's requirements to provide the informational material and automatically enroll qualified employees.

If the authority determines that an employer is not continuing to maintain its retirement plan recognized under the federal tax code then the employer is no longer exempt from the bill. An employer will no longer be considered exempt if the authority determines:

The bill does not specify what the authority will consider when determining whether an employer retirement plan, other than one recognized under federal tax law, is exempt from the bill.

Optional Program Participation

An employer that is not otherwise required to participate under the bill may make the program available to its employees subject to rules and procedures the authority establishes. But the bill prevents an employer from requiring an employee to enroll. Individuals may also participate in the program according to procedures the authority establishes and may roll over funds from other retirement accounts.

Transmitting Withheld Funds

The bill requires qualified employers to transmit withheld employee contributions on the earliest day that the amount held can be segregated from the employer's assets but no later than the 15th business day of the month following the month in which the covered employee's contribution amounts are withheld from his or her paycheck.

8 & 9 — PROGRAM DESIGN FEATURES

The bill requires the authority to invest each participant's IRA in (1) an age-appropriate target date fund, (2) a vehicle designed for lifetime income investment to provide participants with a source of retirement income for life or (3) such other investment vehicles as the authority may prescribe.

Target funds, also known as lifecycle funds or age-based funds typically involve a plan where the investment approach becomes less aggressive as the participant gets older, although the bill does not define target date fund.

The bill provides details for the lifetime income investment option and specifies this is only available if the authority determines its features to be feasible and cost effective. If this is determined to be so, the program must include the following features:

Normal retirement age is 65 years old unless the participant chooses an earlier age except that in no case can the age be earlier than specified in the Social Security Act (42 USC 416 (1)(1)). (The federal law is gradually phasing in older retirement ages; currently normal retirement age is 66.)

Fund Distribution

The authority must establish rules and procedures for IRA fund distribution that allow for the same distribution as the IRS code as well as any the program allows.

10 — ATTORNEY GENERAL OVERSIGHT

The bill authorizes the attorney general to investigate any alleged violation of the bill's requirement that the authority act with prudence and solely in the interests of the participants. If the attorney general finds that any board member or any authority agent has violated or is violating that duty the attorney general may bring a civil action in Hartford Superior Court against the board member or agent. The remedies available to a court in any such action are limited to injunctive relief. Nothing in the bill can be construed to create a private right of action.

10 — EMPLOYER PENALTIES

If a qualified employer fails to remit contributions to the program in the time period specified in the bill, the bill makes this failure a violation of state law regarding an employer's ability to withhold employee wages. By law, violators are punishable by imprisonment and fines and on a sliding scale depending on the amount of wages involved (i.e., if unpaid wages are more than $2,000, guilty of a class D felony, with imprisonment of up to five years, a fine of at least $2,000 but not more than $5,000, or both) .

If a qualified employer fails to enroll a covered employee as required in the bill, the covered employee or the labor commissioner may bring a civil action to require the employer to enroll the employee and may recover the costs and reasonable attorney's fees as allowed by the court.

11 — BOOKKEEPING AND AUDITS

Under the bill, the authority must keep an account of all its activities, receipts, and expenditures and submit a report detailing these items to the authority board, the governor, the Office of Auditors of Public Accounts (“auditors”), and the Labor and Finance, Revenue and Bonding committees by December 31 each year. The report must be in a form the board prescribes and include authority activities for the next fiscal year. Also, the report is subject to the auditors approval.

The bill authorizes the auditors to conduct a full audit of the authority's books and accounts pertaining to activities, receipts, and expenditures, personnel, services or facilities. For the purposes of the audit, the auditors have access to the authority's properties and records and may prescribe methods of accounting and periodic reporting in relation to authority projects.

Furthermore, the bill requires the authority to enter into memoranda of understanding with the state comptroller through which the authority must at a minimum provide, in a form the comptroller prescribes, information on the authority's current revenues and expenses, including the sources or recipients, relevant dates, and the amount and category of each revenue or expense.

12 — STUDY

The bill authorizes the authority to study the feasibility of the state or the authority making a multiple-employer 401(k) plan or other tax-favored retirement savings vehicle available to employers.

13-16 — CONFORMING AUTHORITY CHANGES

The sections make conforming changes by adding the new authority to existing law addressing quasi-publics and (1) the state code of ethics, (2) authority borrowing and bonding power, and (3) liability protection for board members and employees when performing authority duties.

17 & 18 — LABOR PAYROLL LAWS

The bill makes conforming changes to state law regarding employers authority to withhold funds from employees' paychecks for automatic deductions for retirement plans.

19 — REPEALERS

The bill repeals the law creating the Connecticut Retirement Security Board and its duty to create a public retirement plan. The authority the bill creates replaces the board.

COMMITTEE ACTION

Labor and Public Employees Committee

Joint Favorable Substitute

Yea

8

Nay

5

(03/10/2016)

TOP

1 Contributions to Roth IRAs are not deductible for income tax purposes at the time the contribution is made, but earnings and qualified withdrawals are not taxed. Generally, earnings withdrawn within five tax years of the contribution are subject to penalty and taxation.

2 The estimate assumes the authority is physically within an existing state agency. To the extent the authority procures separate office space there will be an additional cost. (Connecticut Retirement Security Board: Market Feasibility Study, January 1, 2016)

3 Ibid., 1, p. 37